The federal government will spend $750 million with weapons company Thales Australia to build 268 new Bushmasters for the Australian Defence Force at the manufacturer's Bendigo facility over the next seven years.
This announcement is expected to support the retention of 300 jobs in the area, while another $450 million earmarked towards upgrades of the Hawkei protected mobility vehicles and the defence force's truck capability will bolster about 150 jobs for Thales in Brisbane.
Defence Minister Richard Marles said this was "great news" for regional Victoria.
"The Australian-built Bushmaster and Hawkei are recognised as world-leading protected mobility vehicles - supporting not just the Australian Defence Force, but the defence forces of our international partners as well," he said.
The Bushmaster Protected Mobility Vehicle has been used most notably to defend against Russia's invasion after Australia gifted more than 100 to Ukraine.
But it has also been exported to Fiji, Jamaica, Japan, New Zealand, the UK, Indonesia and the Netherlands and deployed in conflicts such as the Iraq War, the war in Afghanistan and the Syrian Civil War.
This announcement follows a string of other commitments to increase Australia's defence spending.
On Tuesday, the federal government announced it would spend as much as $7 billion over the next decade on counter-drone systems, including millions on a "Star Wars-like" laser technology that is powerful enough to burn through steel.
Australia's 2026 National Defence Strategy, unveiled in mid April, set aside an extra $53 billion in funding over the next decade.
The move pushes Australia's defence spending to three per cent of GDP by 2035, compared to a previous forecast of 2.3 per cent, and comes after the US pressured its allies to increase their spends to 3.5 per cent of GDP.
According to Mr Marles, Australia's biggest peacetime increase in defence spending is necessary as Australia faces its most "complex and threatening" strategic circumstances since the end of World War II.
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